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Budget 2018: Another brick for affordable housing

More than Rs 25,000 crore has been allotted under PMAY scheme

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The government intends to spend Rs 25,514.95 crore towards the creation of affordable housing, in addition to the financial assistance of Rs 2,025 crore it already has for the same purpose. Finance Minister Arun Jaitley announced various measures keeping in view the 'Housing for All by 2022' a.k.a the Pradhan Mantri Awas Yojana (PMAY) agenda of the Modi government.

As many as 51 lakh homes in rural areas and 37 lakh in urban regions will come up in 2018-19 under an outlay of Rs 21,000 crore and Rs 4,514.92 crore, respectively.

The government's aim is to reduce the number of those suffering from housing deprivation and make provision for basic amenities to the house-less through convergence with other programmes; and generate employment in rural construction.

"The increased investment in agriculture and rural areas should stimulate and boost demand for affordable housing in rural areas and Tier III cities," said Joe Verghese, MD, Colliers International India.

About the overall affordable housing announcement, Anshul Jain, Country Head and MD of Cushman & Wakefield India said, "The standard deduction of Rs 40,000 for salaried persons in the low-income group will marginally help first-home buyers as they will have higher liquidity."

Those already catering to affordable housing segment are cheering as last month, the government had reduced the Goods and Services Tax (GST). Ashok Chhajer, Chairman & MD of Arihant Superstructures said, "Like its predecessors, this Budget too is positive for the sector with continued emphasis on affordable housing sector. Creation of an affordable housing fund under the National Housing Bank (NHB) will provide further impetus to housing demand."

There will also be a World Bank assisted dedicated affordable housing fund — wherein Rs 125 crore will be spent to support construction of about 1,250 housing units for the informal segment of the economy. Additionally, Credit Linked Subsidy Scheme under PMAY (Urban) was allocated Rs 1,900 crore towards disbursal of home loan subsidy to about 1 lakh beneficiaries from the economically weaker section, low and middle-income group. This measure is expected to facilitate institutional credit flow and thereby reduce the gap between supply and demand in housing finance.

As the Budget focussed only on affordable housing, it didn't go down well with realty players who continue to attract GST of 12% on transactions, and had other expectations. "We expected the government to give industry status, though its efforts to support infrastructural development is laudable," said Venkatesh Gopalkrishnan, CEO, Shapoorji Pallonji Real Estate.

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